A further breakdown is not available at this stage, but we note that in Q1 a strong performance by the finance industry contributed an estimated additional 0.5% to GDP growth, thanks to brokerage performance on the back of the equity market rally.

Although this rally collapsed in mid-June, brokerage incomes likely outperformed again for most of the quarter.

Our view is that GDP growth built on an equity market bubble is unsustainable, and with a weaker equity market performance likely in Q3, a repeat GDP shock seems unlikely.

China has defied the sceptics for now, but we do not see much in the data to encourage us about the economy’s future.

In another echo of Q1, it is likely that net exports once again contributed a sizeable chunk to GDP last quarter.

But as in Q1, this is not because of a strong export performance (which contracted in the quarter, year-on-year), but because of a weak import performance, thanks to cheap commodity prices.

Again, this is not a sustainable source of growth; a stronger economy will begin to draw in more imports, and commodity prices will not fall forever.

China faces uncertain future

So while China has defied the sceptics for now, we do not see much in the data to encourage us about the economy’s future.

The performance in Q2 looks to have been built upon shaky foundations, rather than the solid rock of self-sustaining growth.

The biblical house built upon sand ultimately fell with a great crash as the weather turned against it – the same fate may not await China, but all sandcastles ultimately crumble.

China's cut to Banks' reserve requirement ratio signals growth concerns after a weak first quarter, but should not be read as “Chinese QE” or an attempt to weaken the currency and we expect more rate cuts to come in 2015.

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